Gossamer Bio, Inc. 10-K

Item 9A. Controls and Procedures. Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures 85 Table of Contents We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this annual report. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level. Changes in Internal Control Over Financial Reporting There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023 based on the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in its 2013 Internal Control — Integrated Framework. Based on this assessment, our management has concluded that our internal control over financial reporting was effective as of December 31, 2023. 86 Table of Contents Item 9B. Other Information. During the three months ended December 31, 2023, none of our officers or directors adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non Rule 10b5-1 trading arrangement." Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 87 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance. The information required by this item will be contained in our definitive proxy statement to be filed with the Securities and Exchange Commission in connection with our 2024 Annual Meeting of Stockholders, or the Definitive Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2023, under the headings “Election of Directors,” “Corporate Governance,” “Our Executive Officers,” and, if applicable, “Delinquent Section 16(a) Reports,” and is incorporated herein by reference. Code of Business Conduct and Ethics We have adopted a Code of Business Conduct and Ethics that applies to our officers, directors and employees, which is available on our website at www.gossamerbio.com. The Code of Business Conduct and Ethics contains general guidelines for conducting the business of our company consistent with the highest standards of business ethics and is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K. In addition, we intend to promptly disclose (1) the nature of any amendment to our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and (2) the nature of any waiver, including an implicit waiver, from a provision of our code of ethics that is granted to one of these specified officers, the name of such person who is granted the waiver and the date of the waiver on our website in the future. Information contained in our website does not constitute a part of this report or our other filings with the SEC. Item 11. Executive Compensation. The information required by this item will be set forth in the section headed “Executive Compensation and Other Information” in our Definitive Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. The information required by this item will be set forth in the section headed “Security Ownership of Certain Beneficial Owners and Management” in our Definitive Proxy Statement and is incorporated herein by reference. The information required by Item 201(d) of Regulation S-K will be set forth in the section headed "Executive Compensation and Other Information" in our Proxy Statement and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director Independence. The information required by this item will be set forth in the section headed “Certain Relationships and Related Person Transactions,” “Board Independence” and “Board Committees and Independence” in our Definitive Proxy Statement and is incorporated herein by reference. Item 14. Principal Accounting Fees and Services. The information required by this item will be set forth in the section headed “Independent Registered Public Accounting Firm's Fees” in our Definitive Proxy Statement and is incorporated herein by reference. 88 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules. (1) All Financial statements The consolidated financial statements of Gossamer Bio, Inc., together with the report thereon of Ernst & Young LLP, an independent registered public accounting firm, are included in this annual report on Form 10-K beginning on page F-1. (2) Financial statement schedules All schedules have been omitted because the information required to be set forth therein is not applicable or is shown in the consolidated financial statements or notes thereto. (3) Exhibits A list of exhibits is set form on the Exhibit Index immediately preceding the signature page of this annual report on Form 10-K and is incorporated herein by reference. Item 16. Form 10–K Summary. None. 89 Table of Contents Gossamer Bio, Inc. Index to Consolidated Financial Statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F- 1 Consolidated Balance Sheets F- 3 Consolidated Statements of Operations and Comprehensive Loss F- 4 Consolidated Statements of Stockholders’ Equity F- 5 Consolidated Statements of Cash Flows F- 6 Notes to Consolidated Financial Statements F- 7 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Gossamer Bio, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Gossamer Bio, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, and stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. F-1 Table of Contents Accrued Research and Development Expenses Description of the Matter As of December 31, 2023, the Company accrued 7.8 million for research and development expenses. As described in Note 2 of the consolidated financial statements, the Company records accruals for estimated research and development costs, comprising payments due for work performed by third party contractors, laboratories, participating clinical trial sites, and others. Some of these contractor’s bill monthly based on actual services performed, while others bill periodically based upon achieving certain contractual milestones. For the latter, the Company accrues the expenses as goods or services are used or rendered. Clinical trial site costs are accrued as patients enter and progress through the trial. Auditing management’s accounting for accrued research and development expenses is especially challenging as evaluating the progress or stage of completion of the activities under the Company’s research and development agreements is dependent upon a high volume of data from third-party service providers and internal clinical personnel, which is tracked in spreadsheets and other end user computing programs. How We Addressed the Matter in Our Audit To test the completeness of the Company’s accrued research and development expenses, among other procedures, we obtained supporting evidence of the research and development activities performed for significant clinical trials. We corroborated the status of significant research and development activities through meetings with accounting and clinical project managers. To verify the appropriate measurement of accrued research and development costs, we compared the costs for a sample of transactions against the related invoices and contracts, and confirmed amounts incurred to-date with third-party service providers. We also examined a sample of subsequent payments to evaluate the completeness of the accrued research and development expenses. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2018. San Diego, California March 5, 2024 F-2 Table of Contents GOSSAMER BIO, INC. Consolidated Balance Sheets (in thousands, except share and par value amounts) December 31, 2023 2022 ASSETS Current assets Cash and cash equivalents $ 32,109 $ 111,973 Marketable securities 264,316 143,705 Prepaid expenses and other current assets 10,094 6,202 Total current assets 306,519 261,880 Property and equipment, net 1,648 3,981 Operating lease right-of-use assets 3,131 5,909 Other assets 618 680 Total assets $ 311,916 $ 272,450 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 5,526 $ 1,459 Accrued research and development expenses 7,779 15,626 Current portion of long-term debt 11,613 11,613 Accrued expenses and other current liabilities 26,680 20,532 Total current liabilities 51,598 49,230 Long-term convertible senior notes 196,591 195,709 Long-term debt 814 11,988 Operating lease liabilities - long-term 144 3,446 Total liabilities 249,147 260,373 Commitments and contingencies (Note 11) Stockholders' equity Common stock, $ 0.0001 par value; 700,000,000 shares authorized as of December 31, 2023 and December 31, 2022; 225,409,315 shares issued and outstanding as of December 31, 2023, and 94,478,405 shares issued and 94,423,181 shares outstanding as of December 31, 2022 23 10 Additional paid-in capital 1,275,136 1,044,864 Accumulated deficit ( 1,212,040 ) ( 1,032,223 ) Accumulated other comprehensive loss ( 350 ) ( 574 ) Total stockholders' equity 62,769 12,077 Total liabilities and stockholders' equity $ 311,916 $ 272,450 The accompanying notes are an integral part of these consolidated financial statements. F-3 Table of Contents GOSSAMER BIO, INC. Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share amounts) Year Ended December 31, 2023 2022 2021 Operating expenses: Research and development $ 135,304 $ 170,919 $ 170,267 In process research and development 10,000 65 75 General and administrative 38,455 47,609 45,782 Total operating expenses 183,759 218,593 216,124 Loss from operations ( 183,759 ) ( 218,593 ) ( 216,124 ) Other income (expense) Interest income 1,997 1,583 761 Interest expense ( 13,511 ) ( 13,880 ) ( 19,440 ) Other income, net 15,456 1,512 799 Total other income (expense), net 3,942 ( 10,785 ) ( 17,880 ) Net loss $ ( 179,817 ) $ ( 229,378 ) $ ( 234,004 ) Other comprehensive (loss) income: Foreign currency translation 33 ( 544 ) ( 329 ) Unrealized income (loss) on marketable securities 191 ( 75 ) ( 225 ) Other comprehensive income (loss) 224 ( 619 ) ( 554 ) Comprehensive loss ( 179,593 ) ( 229,997 ) ( 234,558 ) Net loss per share, basic and diluted $ ( 1.18 ) $ ( 2.71 ) $ ( 3.13 ) Weighted average common shares outstanding, basic and diluted 152,621,669 84,574,869 74,843,482 The accompanying notes are an integral part of these consolidated financial statements. F-4 Table of Contents GOSSAMER BIO, INC. Consolidated Statements of Stockholders’ Equity (in thousands, except share amounts) Common stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive income (loss) Total stockholders equity Shares Amount Balance as of December 31, 2020 73,874,904 $ 8 $ 897,607 $ ( 577,530 ) $ 599 $ 320,684 Vesting of restricted stock 906,037 — — — — — Exercise of stock options 325,494 — 2,014 — — 2,014 Stock-based compensation — — 32,008 — — 32,008 Issuance of common stock pursuant to Employee Stock Purchase Plan 160,790 — 1,315 — — 1,315 Issuance of common stock for restricted stock units vested 485,439 — — — — — Net loss — — — ( 234,004 ) — ( 234,004 ) Other comprehensive loss — — — — ( 554 ) ( 554 ) Balance as of December 31, 2021 75,752,664 $ 8 $ 932,944 $ ( 811,534 ) $ 45 $ 121,463 Cumulative-effect adjustment from change in accounting principle (See Note 2) — — ( 53,527 ) 8,689 — ( 44,838 ) Issuance of common stock in connection with a private offering, net of offering costs of $ 184 16,649,365 2 119,944 — — 119,946 Vesting of restricted stock 662,700 — — — — — Exercise of stock options 270,707 — 1,736 — — 1,736 Stock-based compensation — — 42,553 — — 42,553 Issuance of common stock pursuant to Employee Stock Purchase Plan 157,858 — 1,214 — — 1,214 Issuance of common stock for restricted stock units vested 929,887 — — — — — Net loss — — — ( 229,378 ) — ( 229,378 ) Other comprehensive loss — — — — ( 619 ) ( 619 ) Balance as of December 31, 2022 94,423,181 $ 10 $ 1,044,864 $ ( 1,032,223 ) $ ( 574 ) $ 12,077 Issuance of common stock and warrants in connection with a private offering, net of offering costs of $ 10,779 129,869,440 13 201,310 — — 201,323 Vesting of restricted stock 55,225 — — — — — Stock-based compensation — — 28,518 — — 28,518 Issuance of common stock pursuant to Employee Stock Purchase Plan 336,795 — 444 — — 444 Issuance of common stock for restricted stock units vested 724,674 — — — — — Net loss — — — ( 179,817 ) — ( 179,817 ) Other comprehensive income — — — — 224 224 Balance as of December 31, 2023 225,409,315 $ 23 $ 1,275,136 $ ( 1,212,040 ) $ ( 350 ) $ 62,769 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents GOSSAMER BIO, INC. Consolidated Statements of Cash Flows (in thousands) Year Ended December 31, 2023 2022 2021 Cash flows from operating activities Net loss $ ( 179,817 ) $ ( 229,378 ) $ ( 234,004 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,607 1,832 1,740 Stock-based compensation expense 28,518 42,553 32,008 In process research and development expenses 10,000 65 75 Amortization of operating lease right-of-use assets 2,778 2,597 3,427 Amortization of long-term debt discount and issuance costs 1,321 1,163 6,731 Amortization of discount (premium) on investments, net of accretion of discounts ( 9,450 ) ( 1,405 ) 339 Loss on disposal of property and equipment 726 — 20 Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 3,892 ) 296 2,631 Other assets 62 400 ( 53 ) Operating lease liabilities ( 2,982 ) ( 2,721 ) ( 3,580 ) Accounts payable 3,990 ( 1,813 ) ( 4,428 ) Accrued expenses ( 835 ) ( 1,659 ) 736 Accrued research and development expenses ( 7,847 ) ( 579 ) 5,774 Accrued compensation and benefits ( 3,240 ) 1,618 ( 278 ) Accrued interest expense ( 97 ) ( 1 ) ( 28 ) Net cash used in operating activities ( 159,158 ) ( 187,032 ) ( 188,890 ) Cash flows from investing activities Research and development asset acquisitions, net of cash acquired — ( 65 ) ( 75 ) Purchase of marketable securities ( 441,670 ) ( 238,060 ) ( 152,031 ) Maturities of marketable securities 330,700 237,500 36,225 Purchase of property and equipment — ( 410 ) ( 1,546 ) Net cash used in investing activities ( 110,970 ) ( 1,035 ) ( 117,427 ) Cash flows from financing activities Proceeds from issuance of common stock and warrants in a private offering, net of offering costs 201,323 119,946 — Proceeds from issuance of common stock under Employee Stock Purchase Plan 444 1,214 1,315 Proceeds from the exercise of stock options — 1,736 2,014 Principal repayments of long-term debt ( 11,613 ) ( 5,806 ) — Net cash provided by financing activities 190,154 117,090 3,329 Effect of exchange rate changes on cash, cash equivalents and restricted cash 110 ( 517 ) ( 165 ) Net decrease in cash, cash equivalents and restricted cash ( 79,864 ) ( 71,494 ) ( 303,153 ) Cash, cash equivalents and restricted cash, at the beginning of the period 111,973 183,467 486,620 Cash, cash equivalents and restricted cash, at the end of the period $ 32,109 $ 111,973 $ 183,467 Supplemental disclosure of cash flow information: Cash paid for interest $ 12,288 $ 12,712 $ 12,738 Supplemental disclosure of noncash investing and financing activities: Right-of-use assets obtained in exchange for lease liabilities $ — $ 3,029 $ — Derecognition ROU lease assets obtained in exchange for operating lease liabilities — $ — $ 1,650 Change in unrealized loss on marketable securities, net $ 191 $ ( 75 ) $ ( 225 ) Purchases of property and equipment included in accounts payable and accrued expenses and other current liabilities $ — $ 83 $ — The accompanying notes are an integral part of these consolidated financial statements. F-6 Table of Contents Gossamer Bio, Inc. Notes to Consolidated Financial Statements Note 1— Description of Business Gossamer Bio, Inc. (including its subsidiaries, referred to as "we," "us," "our,", or the “Company”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of seralutinib for the treatment of pulmonary arterial hypertension, or PAH. The Company was incorporated in the state of Delaware on October 25, 2015 (originally as FSG Bio, Inc.) and is based in San Diego, California. The consolidated financial statements include the accounts of Gossamer Bio, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions among the consolidated entity have been eliminated in consolidation. Liquidity and Capital Resources The Company has incurred significant operating losses since its inception. As of December 31, 2023 and 2022, the Company had an accumulated deficit of $ 1,212.0 million and $ 1,032.2 million, respectively. From the Company’s inception through the year ended December 31, 2023, the Company has funded its operations primarily through equity and debt financings. The Company raised $ 1,263.2 million from October 2017 through December 31, 2023 through the sale of Series A and Series B convertible preferred stock, issuance of convertible notes, its initial public offering ("IPO"), the Credit Facility and 2027 Notes (as defined in Note 5 below), issuance of common stock in May 2020 and July 2022 and issuance of common stock and accompanying warrants in July 2023. See Note 5 for additional information regarding the Credit Facility and the 2027 Notes. On July 24, 2023, the Company completed a private placement of 129,869,440 shares of the Company’s common stock and accompanying warrants to purchase up to 32,467,360 shares of the Company's common stock at a combined purchase price of $ 1.63125 per share and accompanying warrant, or with respect to any purchaser that was an officer, director, employee or consultant of the Company, $ 1.85125 per share and accompanying warrant. Each warrant will have an exercise price per share of $ 2.04 , will be immediately exercisable on the date of issuance and will expire five years from the closing of the private placement. The aggregate gross proceeds for the private placement were approximately $ 212.1 million, before deducting offering expenses, which equaled approximately $ 10.7 million. The Company expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. As a result, the Company will need to raise additional capital through equity offerings, debt financings or other capital sources, including potential collaborations, licenses and other similar arrangements. Management believes that it has sufficient working capital on hand to fund operations through at least the next 12 months from the date these consolidated financial statements were available to be issued. There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years. Note 2— Summary of Significant Accounting Policies Basis of Presentation The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Certain prior period amounts have been reclassified to conform to the current period presentation. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s consolidated financial statements relate to accrued research and development expenses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results could differ from those estimates. F-7 Table of Contents Segments Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business in one operating segment. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents are valued at cost, which approximate their fair value. Marketable Securities The Company considers securities with original maturities of greater than 90 days to be marketable securities. The Company has the ability, if necessary, to liquidate any of its marketable securities to meet its liquidity needs in the next 12 months. Accordingly, those investments with contractual maturities greater than one year from the date of purchase are classified as current assets on the accompanying consolidated balance sheets. The Company’s marketable securities consist of U.S. Treasury and agency securities, commercial paper and corporate debt securities. Marketable securities are recorded at fair value and unrealized gains and losses are recorded within accumulated other comprehensive loss. The estimated fair value of the marketable securities is determined based on quoted market prices or rates for similar instruments. The Company evaluates securities with unrealized losses to determine whether such losses, if any, are due to credit-related factors. The Company records an allowance for credit losses when unrealized losses are due to credit-related factors. Realized gains and losses are calculated using the specific identification method and recorded in other income, net in the Company's consolidated statements of operation and comprehensive loss. The Company does not generally intend to sell the investments and it is not more likely than not that it will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. The Company has determined that there were no material declines in fair values of its investments due to credit-related factors as of December 31, 2023. Concentrations of Credit Risk and Off-Balance Sheet Risk Cash, cash equivalents and marketable securities are financial instruments that are potentially subject to concentrations of credit risk. The Company’s cash and cash equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company maintains its cash equivalents in U.S. Treasury and agency securities and commercial paper with maturities less than three months and in money market funds that invest in U.S. Treasury and agency securities. The Company’s available for sale securities are also invested in U.S. Treasury and agency securities. The Company has not recognized any losses from credit risks on such accounts during any of the periods presented. The Company believes it is not exposed to significant credit risk on its cash, cash equivalents and available for sale securities. Property and Equipment, Net Property and equipment, net, which consists mainly of lab equipment and leasehold improvements, are carried at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the respective assets, generally two to seven years , using the straight-line method. Convertible Senior Notes Prior to the adoption of ASU 2020-06, the Company accounted for the 2027 Notes as a liability and equity component. The carrying amount of the liability component was calculated by measuring the fair value of similar debt instruments that do not have associated convertible features. The carrying amount of the equity component representing the conversion option was determined by deducting the fair value of the liability component from the par value of the 2027 Notes. The equity component was not re-measured as long as it continued to meet the condition for equity classification. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) was amortized to interest expense over the term of the 2027 Notes. The Company allocated the issuance costs incurred to the liability and equity components of the 2027 Notes based on their relative fair values. Issuance costs attributable to the liability component were recorded as a reduction to the liability portion of the 2027 Notes and were amortized to interest expense over the term of the 2027 Notes. Issuance costs F-8 Table of Contents attributable to the equity component, representing the conversion option, were netted with the equity component in stockholders' equity. Effective January 1, 2022 the Company adopted ASU 2020-06. After adoption, the Company now accounts for the 2027 Notes as a single liability measured at amortized cost. The impact upon adoption on the Consolidated Balance Sheets was an increase of approximately $ 44.8 million in convertible senior notes, net, a write-off of $ 9.4 million in deferred income tax liabilities and a decrease of $ 53.5 million in additional paid-in capital. In addition, upon adoption, there was an adjustment of $ 8.7 million to increase the beginning balance of accumulated deficit on the Consolidated Balance Sheets for previously recognized interest expense related to amortization of debt discount related to the carrying value of the embedded conversion feature upon issuance. Leases In accordance with Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), the Company determines if an arrangement is a lease at inception. Operating leases are included in the balance sheet as right-of-use assets and operating lease liabilities at the present value of the lease payments calculated using the Company’s incremental borrowing rate, unless the implicit rate is readily available. The Company applied the short-term lease recognition exemption for leases with terms at inception not greater than 12 months and elected to not separate lease and non-lease components for its long-term leases. The Company records rent expense on a straight-line basis over the term of the lease. Research and Development All research and development costs are expensed as incurred. Research and development costs consist primarily of salaries, employee benefits, costs associated with preclinical studies and clinical trials (including amounts paid to clinical research organizations and other professional services). Payments made prior to the receipt of goods or services to be used in research and development are capitalized until the goods or services are received. The Company records accruals for estimated research and development costs, comprising payments for work performed by third party contractors, laboratories, participating clinical trial sites, and others. Some of these contractors bill monthly based on actual services performed, while others bill periodically based upon achieving certain contractual milestones. For the latter, the Company accrues the expenses as goods or services are used or rendered. Clinical trial site costs related to patient enrollment are accrued as patients enter and progress through the trial. Upfront costs, such as costs associated with setting up clinical trial sites for participation in the trials, are expensed immediately once incurred as research and development expenses. In process research and development In process research and development costs relate to a milestone payment to Pulmokine for the initiation of the Phase 3 clinical trial for seralutinib. Patent Costs Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is uncertain. These costs are included in general and administrative expenses. Income Taxes Income taxes are recorded in accordance with Financial Accounting Standards Board (“FASB”) Standards Codification (“ASC”) No. 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit would more likely than not be realized assuming examination by the taxing authority. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. F-9 Table of Contents Deferred tax assets and liabilities reflect the future tax consequences of the differences between the financial reporting and tax bases of assets and liabilities using current enacted tax rates. Valuation allowances are recorded when the realizability of such deferred tax assets does not meet a more-likely-than-not threshold. For tax benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company is subject to taxation in the United States and California, Ireland and Luxembourg. As of December 31, 2023, the Company’s tax years since inception are subject to examination by taxing authorities due to the Company’s unutilized net operating losses ("NOLs") and tax credits. Stock-Based Compensation The Company expenses stock-based compensation to employees and non-employees over the requisite service period based on the estimated grant-date fair value of the awards. The Company records the expense for stock-based compensation awards subject to performance-based milestone vesting over the requisite service period when management determines that achievement of the milestone is probable. Management evaluates when the achievement of a performance-based milestone is probable based on the expected satisfaction of the performance conditions at each reporting date. The Company estimates the fair value of stock option grants and shares purchasable under the Company's 2019 Employee Stock Purchase Plan ("ESPP") using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. The Company estimates the fair value of restricted stock units based on the closing price of the Company's common stock on the date of grant. The Company accounts for forfeitures as they occur. All share-based compensation costs are recorded in the statements of operations based upon the underlying employees or non-employee’s roles within the Company. Foreign Currency Assets and liabilities of non-U.S. subsidiaries that operate in a local currency environment, where that local currency is the functional currency, are translated to U.S. dollars at exchange rates in effect at the balance sheet date. Income and expense accounts are translated at average exchange rates during the year which approximate the rates in effect at the transaction dates. The resulting translation adjustments are recorded in accumulated other comprehensive loss in the Company's consolidated balance sheets. Foreign exchange transaction gains and losses are included in other income, net in the Company’s consolidated statement of operations and comprehensive loss. Recent Accounting Pronouncements - Announced In December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures. Net Loss Per Share Basic net loss per share of common stock is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. The Company uses the if-converted method for assumed conversion of the 2027 Notes to compute the weighted average shares of common stock outstanding for diluted net loss per share. Diluted net loss per share excludes the potential impact of the Company’s common stock options, warrants for the purchase of common stock, unvested shares of restricted stock and the potential shares issuable upon conversion of the 2027 Notes because their effect would be anti-dilutive due to the Company’s net loss. Since the Company had a net loss in each of the periods presented, basic and diluted net loss per common share are the same. The table below provides potentially dilutive securities not included in the calculation of the diluted net loss per share because to do so would be anti-dilutive: December 31, 2023 2022 2021 2027 Notes 12,321,900 12,321,900 12,321,900 Shares issuable upon exercise of stock options 23,626,115 17,487,165 9,434,660 Shares issuable upon exercise of warrants 32,467,360 — — Non-vested shares under restricted stock grants 427,698 1,350,035 2,561,219 Total potentially dilutive securities 68,843,073 31,159,100 24,317,779 F-10 Table of Contents Note 3— Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2023 2022 Accrued compensation and benefits $ 10,294 $ 13,534 Operating lease liabilities 3,302 2,983 Accrued consulting fees 643 1,104 Accrued interest 968 1,065 Accrued legal fees 385 380 Accrued in process research and development 10,000 — Accrued accounting fees 234 521 Accrued other 854 945 Total accrued expenses and other current liabilities $ 26,680 $ 20,532 Note 4— Fair Value Measurements and Available for Sale Investments Fair Value Measurements The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1: Observable inputs such as quoted prices in active markets; Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The Company classifies its cash equivalents and available-for-sale investments within Level 1 or Level 2. The fair value of the Company’s investment grade corporate debt securities and commercial paper is determined using proprietary valuation models and analytical tools, which utilize market pricing or prices for similar instruments that are both objective and publicly available, such as matrix pricing or reported trades, benchmark yields, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, and offers. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the hierarchy for assets measured at fair value on a recurring basis as of December 31, 2023 and 2022 (in thousands): F-11 Table of Contents Fair Value Measurements at End of Period Using: Total Fair Value Quoted Market Prices for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) As of December 31, 2023 Money market funds $ 25,222 $ 25,222 $ — $ — U.S. Treasury and agency securities 92,309 92,309 — — Commercial paper 168,534 — 168,534 — Corporate debt securities 3,473 — 3,473 — As of December 31, 2022 Money market funds $ 54,662 $ 54,662 $ — $ — U.S. Treasury and agency securities 31,458 31,458 — — Commercial paper 103,409 — 103,409 — Corporate debt securities 8,838 — 8,838 — The Company did not reclassify any investments between levels in the fair value hierarchy during the periods presented. Fair Value of Other Financial Instruments As of December 31, 2023 and 2022, the carrying amounts of the Company’s financial instruments, which include cash, prepaid and other current assets, interest receivable, accrued research and development expenses, accounts payable and accrued expenses and other current liabilities, approximate fair values because of their short-term maturities. There was no significant interest receivable as of December 31, 2023 and 2022, and is recorded as a component of prepaid expenses and other current assets on the consolidated balance sheets. The Company believes that its Credit Facility bears interest at a rate that approximates prevailing market rates for instruments with similar characteristics and, accordingly, the carrying value of the Credit Facility approximates fair value. The Company estimates the fair value of long-term debt utilizing an income approach. The Company uses a present value calculation to discount principal and interest payments and the final maturity payment on these liabilities using a discounted cash flow model based on observable inputs. The debt instrument is then discounted based on what the current market rates would be as of the reporting date. Based on the assumptions used to value these liabilities at fair value, the debt instrument is categorized as Level 2 in the fair value hierarchy. As of December 31, 2023 and 2022 the fair value of the Company's 2027 Notes was $ 74.9 million and $ 61.0 million, respectively. The fair value was determined on the basis of market prices observable for similar instruments and is considered Level 2 in the fair value hierarchy (see Note 5). Available for Sale Investments The Company invests its excess cash in U.S. Treasury and agency securities, corporate debt securities, and commercial paper, which are classified as available-for-sale investments. These investments are carried at fair value and are included in the tables below. The Company evaluates securities with unrealized losses to determine whether such losses, if any, are due to credit-related factors. Realized gains and losses are calculated using the specific identification method and recorded in other income, net in the Company's consolidated statements of operations and comprehensive loss. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recover of their amortized cost basis. F-12 Table of Contents The aggregate market value, cost basis, and gross unrealized gains and losses of available-for-sale investments by security type, classified in marketable securities as of December 31, 2023 and 2022 are as follows (in thousands except securities amounts): Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Total Fair Value As of December 31, 2023 U.S Treasury and agency securities $ 92,294 $ 20 $ ( 5 ) $ 92,309 Corporate debt securities 3,467 6 — 3,473 Commercial paper 168,488 76 ( 30 ) 168,534 Total marketable securities $ 264,249 $ 102 $ ( 35 ) $ 264,316 Number of securities with unrealized losses 12 As of December 31, 2022 U.S. Treasury and agency securities $ 31,445 $ 15 $ ( 2 ) $ 31,458 Corporate debt securities 8,876 $ — ( 38 ) 8,838 Commercial paper 103,508 1 ( 100 ) 103,409 Total marketable securities $ 143,829 $ 16 $ ( 140 ) $ 143,705 Number of securities with unrealized losses 16 At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are due to credit-related factors. The Company records an allowance for credit losses when unrealized losses are due to credit-related factors. Factors considered when evaluating available-for-sale investments for impairment include the severity of the impairment, changes in underlying credit ratings, the financial condition of the issuer, the probability that the scheduled cash payments will continue to be made and the Company’s intent and ability to hold the investment until recovery of the amortized cost basis. The Company intends and has the ability to hold its investments in unrealized loss positions until their amortized cost basis has been recovered. As of December 31, 2023 and 2022, there were no material declines in the market value of the Company's available-for-sale investments due to credit-related factors. Contractual maturities of available-for-sale debt securities, as of December 31, 2023, were as follows (in thousands): Estimated Fair Value Less than one year $ 264,316 Greater than one year — Total $ 264,316 The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months. Note 5— Indebtedness Credit Facility On May 2, 2019, the Company entered into a credit, guaranty and security agreement, as amended on September 18, 2019, July 2, 2020, December 7, 2022 and February 14, 2023 (the “Credit Facility”), with MidCap Financial Trust (“MidCap”), as agent and lender, and the additional lenders party thereto from time to time (together with MidCap, the “Lenders”), pursuant to which the Lenders, agreed to make term loans available to the Company for working capital and general business purposes, in a principal amount of up to $ 150.0 million in term loan commitments, including a $ 30.0 million term loan that was funded at the closing date, with the ability to access the remaining $ 120.0 million in two additional tranches (each $ 60.0 million), subject to specified availability periods, the achievement of certain clinical development milestones, minimum cash requirements and other customary conditions. The Company did not achieve the clinical development milestone required to access one of the $ 60.0 million tranches and access to the other $ 60.0 million tranche expired on December 31, 2022. The Company, GB001, Inc., GB002, Inc., and GB004, Inc., each wholly-owned subsidiaries of the Company, are designated as co-borrowers to the Credit Facility, whereas GB003, Inc., GB005, Inc., GB007, Inc., GB008, Inc. and Gossamer F-13 Table of Contents Bio Services, Inc., each wholly-owned subsidiaries of the Company, are designated as guarantors. The Credit Facility is secured by substantially all of the Company’s and its domestic subsidiaries’ personal property, including intellectual property. Each term loan under the Credit Facility bears interest at an annual rate equal to the sum of (i) the secured overnight financing rate (“SOFR”), plus corresponding spread, plus (ii) 7.00 %, subject to a SOFR floor of 2.00 %. The borrower is required to make interest-only payments on the term loan for all payment dates prior to July 1, 2022. The term loans under the Credit Facility began amortizing on July 1, 2022, with equal monthly payments of principal plus interest being made by the Company to the Lenders in consecutive monthly installments following such interest-only period until the Credit Facility matures on January 1, 2025. Upon final repayment of the term loans, the borrower must pay an exit fee of 1.75 % of the amount borrowed under the Credit Facility, less any partial exit fees previously paid. Upon partial prepayment of a portion of the term loans, the borrower must pay a partial exit fee of 1.75 % of the principal being prepaid. At the borrower’s option, the borrower may prepay the outstanding principal balance of the term loan in whole or in part, subject to a prepayment fee of 3.00 % of any amount prepaid if the prepayment occurs through and including the first anniversary of the second amendment effective date, 2.00 % of the amount prepaid if the prepayment occurs after the first anniversary of the second amendment effective date through and including the second anniversary of the second amendment effective date, and 1.00 % of any amount prepaid after the second anniversary of the second amendment effective date and prior to January 1, 2025. On December 7, 2022, the Company entered into the Third Amendment to the Credit Facility, with no change to the principal or repayment terms, except with respect to the interest rate applicable to the Credit Facility, with the implementation of a forward-looking term rate based on SOFR as the replacement of LIBOR as the benchmark interest rate. The Company accounted for the change in reference rate as a non-substantial modification as allowed under ASU 2020-04. The Credit Facility includes affirmative and negative covenants applicable to the Company and certain of its subsidiaries. The affirmative covenants include, among others, covenants requiring such entities to maintain their legal existence and governmental approvals, deliver certain financial reports, maintain insurance coverage, maintain property, pay taxes, satisfy certain requirements regarding accounts and comply with laws and regulations. The negative covenants include, among others, restrictions on such entities from transferring collateral, incurring additional indebtedness, engaging in mergers or acquisitions, paying dividends or making other distributions, making investments, creating liens, amending material agreements and organizational documents, selling assets and suffering a change in control, in each case subject to certain exceptions. The Company and certain of its subsidiaries are also subject to an ongoing minimum cash financial covenant in which they must maintain unrestricted cash in an amount not less than 25 % of the outstanding principal amount of the term loans. As of December 31, 2023, the Company was in compliance with these covenants. The Credit Facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 3.00 % and would provide MidCap, as agent, with the right to exercise remedies against the Company and/or certain of its subsidiaries, and the collateral securing the Credit Facility, including foreclosure against the properties securing the credit facilities, including cash. These events of default include, among other things, failure to pay any amounts due under the Credit Facility, a breach of covenants under the Credit Facility, insolvency or the occurrence of insolvency events, the occurrence of a change in control, the occurrence of certain U.S. Food and Drug Administration ("FDA") and regulatory events, failure to remain registered with the SEC and listed for trading on Nasdaq, the occurrence of a material adverse change, the occurrence of a default under a material agreement reasonably expected to result in a material adverse change, the occurrence of certain defaults under certain other indebtedness in an amount greater than $ 2.5 million and the occurrence of certain defaults under subordinated indebtedness and convertible indebtedness. Debt consisted of the following (in thousands): December 31, 2023 Debt, current portion $ 11,613 Debt, non-current portion 968 Total debt 12,581 Less: unamortized debt discount and issuance costs ( 154 ) Debt, net $ 12,427 F-14 Table of Contents The scheduled future minimum principal payments as of December 31, 2023 are as follows (in thousands): 2024 $ 11,613 2025 968 Total $ 12,581 5.00 % Convertible Senior Notes due 2027 On May 21, 2020, the Company issued $ 200.0 million aggregate principal amount of 5.00 % convertible senior notes due 2027 in a public offering (the "2027 Notes"). The 2027 Notes were registered pursuant to the Company’s shelf registration statement on Form S-3 filed with the SEC on April 10, 2020. The interest rate on the 2027 Notes is fixed at 5.00 % per annum. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2020. The 2027 Notes will mature on June 1, 2027. The net proceeds from the offering, after deducting the underwriting discounts and commissions and other offering costs, were approximately $ 193.6 million. The 2027 Notes may be settled in cash, shares of the Company’s common stock, or a combination thereof, solely at the Company’s election. The initial conversion rate of the 2027 Notes is 61.6095 shares per $1,000 principal amount, which is equivalent to a conversion price of approximately $ 16.23 per share, subject to adjustments. In addition, following certain corporate events that occur prior to the maturity date or if the Company issues a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its 2027 Notes in connection with such a corporate event during the related redemption period in certain circumstances. The 2027 Notes are senior unsecured obligations of the Company, ranking senior in right of payment to any of the Company’s indebtedness that is expressly subordinated in right of payment to the 2027 Notes, and are effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness, including all indebtedness under the Credit Facility. Holders may convert their notes at their option only in the following circumstances: (1) during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on September 30, 2020, if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (2) during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (3) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (4) if the Company calls such notes for redemption; and (5) at any time from, and including, March 1, 2027 until the close of business on the scheduled trading day immediately before the maturity date. The Company will not have the right to redeem the 2027 Notes prior to June 6, 2024. On or after June 6, 2024 and on or before the 50 th scheduled trading day immediately before the maturity date, the Company may redeem the 2027 Notes, in whole or in part, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect on (1) each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (2) the trading day immediately before the date the Company sends such notice. In the case of any optional redemption, the Company will redeem the 2027 Notes at a redemption price equal to 100 % of the principal amount of such Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company undergoes a fundamental change prior to the maturity date of the 2027 Notes, holders of the 2027 Notes may require the Company to repurchase for cash all or part of their 2027 Notes at a repurchase price equal to 100 % of the principal amount of the 2027 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. The indenture governing the 2027 Notes provides for customary terms and covenants, including that upon certain events of default, either the trustee or the holders of not less than 25 % in aggregate principal amount of the 2027 Notes then outstanding may declare the unpaid principal amount of the 2027 Notes and accrued and unpaid interest, if any, thereon immediately due and payable. As of December 31, 2023, the Company was in compliance with these covenants. In the case of certain events of bankruptcy, insolvency or reorganization, the principal amount of the 2027 Notes together with accrued and unpaid interest, if any, thereon will automatically become and be immediately due and payable. F-15 Table of Contents As of December 31, 2023 and 2022, there were no events or market conditions that would allow holders to convert the 2027 Notes. When the 2027 Notes become convertible within 12 months of the balance sheet date, the carrying value of the 2027 Notes will be reclassified to short-term. As a result of the adoption of ASU 2020-06, the Company no longer accounts for the 2027 Notes separately as a liability and equity component. The conversion feature of the 2027 Notes was previously represented by an equity component of $ 53.5 million at issuance, with the excess of the principal amount of the liability component over the carrying amount (“debt discount”) was amortized to interest expense over the term of the 2027 Notes at an effective interest rate of 11.17 %. The Company accounts for the 2027 Notes as a single liability measured at amortized cost. As the equity component is no longer required to be split into a separate component, the Company recorded an adjustment to reflect this update. The Company recorded $ 0.4 million of the debt issuance costs related to the 2027 Notes as a reduction to the liability and amortizes these costs to interest expense over the term of the 2027 Notes. The net carrying amount of the liability component of the 2027 Notes was as follows (in thousands): December 31, 2023 2022 Principal amount $ 200,000 $ 200,000 Unamortized debt discount ( 3,194 ) ( 4,021 ) Unamortized debt issuance cost ( 215 ) ( 270 ) Net carrying amount $ 196,591 $ 195,709 The following table sets forth the interest expense recognized related to the 2027 Notes (in thousands): Year Ended December 31, 2023 2022 2021 Contractual interest expense $ 10,000 $ 10,000 $ 9,972 Amortization of debt discount 826 782 6,364 Amortization of debt issuance cost 56 53 32 Total interest expense related to the 2027 Notes $ 10,882 $ 10,835 $ 16,368 Note 6— Licenses, Asset Acquisitions and Contingent Consideration The following purchased assets were accounted for as asset acquisitions as substantially all of the fair value of the assets acquired were concentrated in a group of similar assets and/or the acquired assets were not capable of producing outputs due to the lack of employees and early stage of development. Because the assets had not yet received regulatory approval, the fair value attributable to these assets was recorded as in process research and development (“IPR&D”) expenses in the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2023, 2022, and 2021. The Company accounts for contingent consideration payable upon achievement of certain regulatory, development or sales milestones in such asset acquisitions when the underlying contingency is met. License from Pulmokine, Inc. (Seralutinib) On October 2, 2017, the Company entered into a license agreement with Pulmokine, Inc. under which it was granted an exclusive worldwide license and sublicense to certain intellectual property rights owned or controlled by Pulmokine to develop and commercialize seralutinib and certain backup compounds for the treatment, prevention and diagnosis of any and all disease or conditions. The Company also has the right to sublicense its rights under the license agreement, subject to certain conditions. The assets acquired are in the early stages of the FDA approval process, and the Company intends to further develop the assets acquired through potential FDA approval as evidenced by the milestone arrangement in the contract. The F-16 Table of Contents development activities cannot be performed without significant cost and effort by the Company. The agreement will remain in effect from the effective date, unless terminated earlier, until, on a licensed product-by-licensed product and country-by-country basis, the later of ten years from the date of first commercial sale or when there is no longer a valid patent claim covering such licensed product or specified regulatory exclusivity for the licensed product in such country. The Company is obligated to make future development and regulatory milestone payments of up to $ 58.0 million, which includes a payment of $ 10.0 million due upon initiation of the first Phase 3 clinical trial, commercial milestone payments of up to $ 45.0 million, and sales milestone payments of up to $ 190.0 million. The Company is also obligated to pay tiered royalties on sales for each licensed product, at percentages ranging from the mid-single digits to the high single-digits. In addition, if the Company chooses to sublicense or assign to any third parties its rights under the agreement with respect to a licensed product, or the Company’s seralutinib operating subsidiary undergoes a change of control, the Company must pay to Pulmokine a specified percentage of all revenue to be received in connection with such transaction. The Company made an upfront payment of $ 5.5 million in October 2017. The Company made a milestone payment of $ 5.0 million in connection with the initiation of the first Phase 2 clinical trial of seralutinib in January 2021. As of December 31, 2023, the Company accrued a milestone payment of $ 10.0 million in connection with the initiation of the Phase 3 clinical trial of seralutinib, which was paid in January 2024. No other milestones had been accrued as the underlying contingencies had not yet been met. The Company recorded the following IPR&D expense on the consolidated statements of operations and comprehensive loss (in thousands): Year Ended December 31, 2023 2022 2021 Seralutinib $ 10,000 $ — $ — Terminated programs — 65 75 Total in process research and development $ 10,000 $ 65 $ 75 Note 7— Income Taxes The amount of net loss before taxes for the years ended December 31, 2023, 2022, and 2021 is as follows (in thousands): December 31, 2023 2022 2021 (in thousands) U.S. loss before taxes $ 134,073 $ 175,777 $ 183,194 Foreign loss before taxes 45,736 53,593 50,802 Pre-tax Loss $ 179,809 $ 229,370 $ 233,996 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities at December 31, 2023, 2022 and 2021 are shown below. The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred assets. At such time as it is determined that it is more likely than not that the deferred tax asset will be realized, the valuation allowance will be reduced. The change in the valuation allowance for the year ended December 31, 2023 was an increase of $ 17.3 million. F-17 Table of Contents December 31, 2023 2022 2021 (in thousands) Deferred tax assets: Net operating losses $ 122,987 $ 128,989 $ 116,425 Tax credits, net 45,445 34,193 24,964 Amortization 6,919 8,487 9,190 Stock-based compensation 9,886 8,445 4,917 Lease liability 726 1,354 1,285 Accrued compensation 1,887 2,514 2,238 Section 174 34,268 21,840 — Other 43 37 18 Total gross deferred tax assets 222,161 205,859 159,037 Deferred tax liabilities: Convertible senior notes — — ( 9,395 ) Right of use asset ( 660 ) ( 1,244 ) ( 1,150 ) Property, plant and equipment ( 108 ) ( 565 ) ( 790 ) Total gross deferred tax liabilities ( 768 ) ( 1,809 ) ( 11,335 ) Valuation allowance ( 221,393 ) ( 204,050 ) ( 147,702 ) Net deferred tax asset $ — $ — $ — As of December 31, 2023, the Company had federal and state NOL carryforwards of approximately $ 532.1 million and $ 1.8 million, respectively. The federal NOL carryforwards generated prior to January 1, 2018 begin to expire in 2034, unless previously utilized. The federal NOLs generated in taxable years beginning after December 31, 2017 of $ 529.1 million can be carried forward indefinitely but may only be used to offset up to 80 % of future taxable income each year. The California NOL carryforwards begin to expire in 2036. As of December 31, 2023, the Company also has foreign NOL carryforwards of approximately $ 89.1 million. The foreign NOL can be carried forward indefinitely. In the current year, the Company determined $ 140.0 million of foreign NOL carryforwards were relinquished due to liquidation and adjusted the carryforward accordingly. As of December 31, 2023, the Company also had orphan drug credit and federal research tax credit carryforwards of approximately $ 48.6 million and California research tax credits of $ 12.4 million. The federal research tax credit carryforwards begin to expire in 2038, and the California research tax credit carryforward does not expire and can be carried forward indefinitely until utilized. A reconciliation of the federal statutory income tax rate to the Company’s effective income tax rate is as follows: December 31, 2023 2022 2021 Federal statutory income tax rate 21.00 % 21.00 % 21.00 % State income taxes, net of federal benefit — % — % — % Change in valuation allowance ( 8.73 %) ( 20.25 %) ( 19.73 %) Research and experimentation credits 5.69 % 3.39 % 2.62 % Foreign rate differential ( 2.13 %) ( 1.88 %) ( 1.95 %) Stock-based compensation ( 1.44 %) ( 0.90 %) ( 1.56 %) Nondeductible interest ( 1.27 %) ( 0.99 %) ( 0.96 %) Foreign Restructuring Impact ( 12.49 %) — % — % Other ( 0.62 %) ( 0.37 %) 0.57 % Provision for income taxes — % — % — % F-18 Table of Contents The NOL carryforward may be subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions if the Company experienced one or more ownership changes which would limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax respectively. In general, an ownership change as defined by Sections 382 and 383, results from the transactions increasing ownership of certain stockholders or public groups in the stock of the corporation of more than 50 percentage points over a three-year period. The Company had an ownership change with the IPO in February of 2019 which resulted in no forfeiture of NOL’s or credits. The Company is completing a review of whether an ownership change occurred for purposes of Sections 382 and 383 Code through 2023. If ownership changes have occurred, including as a result of the Company's private placements of common stock in 2022 and 2023, or additional ownership changes occur in the future as a result of changes in The Company's stock ownership, many of which are outside the Company's control, the NOL and credit carryforwards could be subject to further annual limitations. The Company will update their NOL’s and credits once the analysis is completed. If NOL’s and credits are forfeited, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the valuation allowance, limitations created by future ownership changes, if any, will not impact the Company’s effective tax rate. The Company files income tax returns in the United States, California, Florida, Ireland, and Luxembourg. Due to the Company’s losses incurred, the Company is subject to the income tax examination by authorities since inception. The Company’s policy is to recognize interest expense and penalties related to income tax matters as tax expense. As of December 31, 2023, 2022, or 2021, there were no accruals for interest related to unrecognized tax benefits or tax penalties. A reconciliation of the beginning and ending amount of unrecognized tax benefits for 2023, 2022, and 2021, excluding interest and penalties, is as follows: December 31, 2023 2022 2021 (in thousands) Balance at beginning of the year $ 10,572 $ 7,551 $ 5,060 Increase related to current year positions 3,082 3,021 2,491 Balance at the end of the year $ 13,654 $ 10,572 $ 7,551 Included in the balance of unrecognized tax benefits at December 31, 2023 is $ 13.7 million that, if recognized, would not impact the Company’s income tax benefit or effective tax rate as long as the Company's deferred tax asset remains subject to a full valuation allowance. The Company does not expect any significant increases or decreases to the Company's unrecognized tax benefits within the next 12 months. Note 8— Stockholders’ Equity Common Stock Each share of common stock is entitled to one vote. Common stock owners are entitled to dividends when funds are legally available and declared by the Company's board of directors. Shelf Registration Statement and Stock Offering On April 10, 2020, the Company filed a universal shelf registration statement on Form S-3, covering the offering from time to time of common stock, preferred stock, debt securities, warrants and units, which registration statement became automatically effective on April 10, 2020 (the “Shelf Registration Statement”). On May 21, 2020, the Company completed a public offering of 9,433,963 shares of its common stock at a public offering price of $ 13.25 per share. The net proceeds from the offering, after deducting underwriting discounts and commissions and other offering costs, were approximately $ 117.1 million. The shares sold in the offering were registered pursuant to the Company’s Shelf Registration Statement. Private Placement Financing On July 15, 2022, the Company completed a private placement of 16,649,365 shares of the Company's common stock at purchase price of $ 7.21 per share. The gross proceeds for the private placement were $ 120.1 million, before deducting offering expenses, which equaled $ 0.2 million. On August 9, 2022, the Company filed a registration statement on Form S-3 registering the shares of common stock issued in the private placement, which registration statement became automatically effective on August 9, 2022. F-19 Table of Contents On July 24, 2023, the Company completed a private placement of 129,869,440 shares of the Company’s common stock and accompanying warrants to purchase up to 32,467,360 shares of the Company's common stock at a combined purchase price of $ 1.63125 per share and accompanying warrant, or with respect to any purchaser that was an officer, director, employee or consultant of the Company $ 1.85125 , per share and accompanying warrant. Each warrant has an exercise price per share of $ 2.04 , was immediately exercisable on the date of issuance and will expire five years from the closing of the private placement. The aggregate gross proceeds for the private placement were $ 212.1 million, before deducting offering expenses, which equaled $ 10.8 million. On August 18, 2023, the Company filed a registration statement on Form S-3 registering the shares of common stock and shares of common stock issuable upon the exercise of warrants issued in the private placement, which registration statement was declared effective on August 28, 2023. Shares of Common Stock Subject to Repurchase On December 3, 2015, the Company issued 9,160,888 shares of common stock as founder shares for services rendered to the Company, valued at $ 0.0001 par value per share, for a total of approximately $ 4,100 (the “founder shares”). On January 4, 2018, incremental vesting conditions were placed on the previously issued founder shares. Fifty percent of the previously issued founder shares vested on January 4, 2018, and the remaining founder shares are subject to vesting restrictions over a period of five years . These shares are subject to repurchase by the Company upon a founder's termination of employment or service to the Company. Pursuant to the employment agreements with the Company’s founders executed January 4, 2018, the Company provided for certain potential additional issuances of common stock (the “anti-dilution shares”) to each of the founders to ensure the total number of shares of common stock held by them and their affiliates (inclusive of any shares subject to equity awards granted by the Company) would represent 15 % of the Company’s fully-diluted capitalization until such time as the Company raised $ 300.0 million in equity capital, including the capital raised in the Series A financing. In furtherance of this obligation, on May 21, 2018, the Company issued 251,547 shares of common stock to the founders for services rendered to the Company, valued at $ 2.61 per share with an additional 251,547 shares of restricted stock subject to the same vesting restrictions and vesting period as the founder shares. In addition, on September 6, 2018, the Company issued 1,795,023 shares of common stock to the founders for services rendered to the Company, valued at $ 9.63 per share, with an additional 1,795,023 shares of restricted stock subject to the same vesting restrictions and vesting period as the founder shares. For the year ended December 31, 2023, no shares were forfeited due to termination of employment. Any shares subject to repurchase by the Company are not deemed, for accounting purposes, to be outstanding until those shares vest. As such, the Company recognizes the measurement date fair value of the restricted stock over the vesting period as compensation expense. As of December 31, 2023, there were no shares of common stock subject to repurchase by the Company. The unvested stock liability related to these awards is immaterial to all periods presented. Note 9— Equity Incentive Plans 2023 Equity Inducement Incentive Plan In November 2023, the Company approved the 2023 Employment Inducement Incentive Plan (the "2023 Inducement Plan"). The terms of the 2023 Inducement Plan are substantially similar to the terms of the Company’s 2019 Incentive Award Plan (as described below) with the exception that incentive stock options may not be issued under the 2023 Inducement Plan and awards under the 2023 Inducement Plan may only be issued to eligible recipients under the applicable Nasdaq rules. The 2023 Inducement Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, awards under the 2023 Inducement Plan may only be made to an employee who has not previously been an employee or member of the board of directors of the Company or any parent or subsidiary, or following a bona fide period of non-employment by the Company or a parent or subsidiary, if he or she is granted such award in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. The Company has initially reserved 6,762,279 shares of the Company’s common stock for issuance pursuant to awards granted under the 2023 Inducement Plan. As of December 31, 2023, an aggregate of 5,262,279 shares of common stock were available F-20 Table of Contents for issuance under the 2023 Inducement Plan, and 1,500,000 shares of common stock were subject to outstanding awards under the 2023 Inducement Plan. 2019 Equity Incentive Plan In January 2019, the Company’s board of directors and stockholders approved and adopted the 2019 Incentive Award Plan (the “2019 Plan”). The 2019 Plan became effective on February 6, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards to individuals who are then employees, officers, directors or consultants of the Company, and employees and consultants of the Company’s subsidiaries. A total of 5,750,000 shares of common stock were approved to be initially reserved for issuance under the 2019 Plan. The number of shares that remained available for issuance under the 2017 Plan (as defined below) as of the effective date of the 2019 Plan were, and shares subject to outstanding awards under the 2017 Plan as of the effective date of the 2019 Plan that are subsequently canceled, forfeited or repurchased by the Company will be added to the shares reserved under the 2019 Plan. In addition, the number of shares of common stock available for issuance under the 2019 Plan will be automatically increased on the first day of each calendar year during the ten-year term of the 2019 Plan, beginning with January 1, 2020 and ending with January 1, 2029, by an amount equal to 5 % of the outstanding number of shares of the Company’s common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. As of December 31, 2023, an aggregate of 718,453 shares of common stock were available for issuance under the 2019 Plan and 20,374,879 shares of common stock were subject to outstanding awards under the 2019 Plan. 2019 Employee Stock Purchase Plan In January 2019, the Company’s board of directors and stockholders approved and adopted the 2019 Employee Stock Purchase Plan (the "ESPP"). The ESPP became effective as of February 6, 2019, the day prior to the effectiveness of the registration statement filed in connection with the IPO. The ESPP permits participants to purchase common stock through payroll deductions of up to 20 % of their eligible compensation. A total of 700,000 shares of common stock were approved to be initially reserved for issuance under the ESPP. In addition, the number of shares of common stock available for issuance under the ESPP will be automatically increased on the first day of each calendar year during the first ten-years of the term of the ESPP, beginning with January 1, 2020 and ending with January 1, 2029, by an amount equal to 1 % of the outstanding number of shares of the Company’s common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Company’s board of directors. During the years ended December 31, 2023 and 2022, 336,795 shares and 157,858 shares were issued pursuant to the ESPP, respectively. As of December 31, 2023, an aggregate of 3,058,844 shares of common stock were available for issuance under the ESPP. 2017 Equity Incentive Plan The Company’s 2017 Equity Incentive Plan (the “2017 Plan”) permitted the granting of incentive stock options, non-statutory stock options, restricted stock, restricted stock units and other stock-based awards. Subsequent to the adoption of the 2019 Plan, no additional equity awards can be made under the 2017 Plan. As of December 31, 2023, 2,178,934 shares of common stock were subject to outstanding options under the 2017 Plan, and no shares of restricted stock awards granted under the 2017 Plan were unvested. Stock Options The fair value of each employee and non-employee time-vested stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company uses its own volatility to the extent it has sufficient trading history, and for awards in which sufficient trading history is not available, a peer group is used. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. On May 5, 2023, the Company granted to its Chairman and Chief Executive Officer 750,000 options with an exercise price of $ 1.36 per share. This grant contains both service and market based vesting conditions. The awards vest on the later of the date of achievement and the one-year anniversary of the grant date. The market condition becomes satisfied in 50 %, 25 % and 25 % tranches upon achieving the average per-share closing price of the Company's common stock over any 30 consecutive calendar days following the grant date equal to or exceeding $ 5.00 , $ 7.50 and $ 10.00 , respectively. In the event a F-21 Table of Contents stock price tranche has not vested prior to the fourth anniversary of the grant date, any portion of the option attributable to such tranche will be forfeited. Due to the market condition included in this grant, the Company used the Geometric Brownian Motion/Monte Carlo model to value this award. The total stock-based compensation expense related to this award is $ 0.4 million, which is included in general and administrative expense on the consolidated statements of operations and comprehensive loss. The Company expects to recognize this expense over a weighted average period of approximately 2.2 years. Effective May 5, 2023, and in accordance with the terms of the 2019 Plan, the Company's board of directors approved a stock option repricing (the “Option Repricing”) whereby the exercise price of each Eligible Option (as defined below) was immediately reduced to $ 1.36 per share, the closing stock price on May 5, 2023. For purposes of the Option Repricing, “Eligible Options” are 6,817,057 outstanding stock options as of May 5, 2023 (vested or unvested) granted under the 2019 Plan prior to November 30, 2022 and held by those eligible employees of the Company identified by the Company's board of directors, including the Company’s executive officers, except for the Company’s Chairman and Chief Executive Officer. The participation of the executive officers of the Company in the Option Repricing was subject to their agreement to cancel a portion of their Eligible Options effective immediately (the “Cancelled Options”). Each executive was required to agree to cancel one-third of his or her Eligible Options, on a grant-by-grant basis. The Cancelled Options were deducted proportionately from the vested and unvested portions of each Repriced Option grant. To the extent an Eligible Option is exercised prior to the Premium End Date (as defined below), or the eligible employee’s employment terminates prior to the Premium End Date, the eligible employee will be required to pay the original exercise price per share of the Eligible Options in connection with any exercise of the Eligible Option. The “Premium End Date” means the earliest of (i) May 5, 2024, (ii) the date of a change in control, (iii) the eligible employee’s death or disability, or (iv) if an eligible employee is an executive subject to the cancellation of a portion of Eligible Options and is terminated under circumstances giving rise to severance under his or her employment agreement, the date of such termination. Except for the reduction in the exercise prices of the Eligible Options as described above, the Eligible Options will retain their existing terms and conditions as set forth in the 2019 Plan and the applicable award agreements. The repricing resulted in $ 3.4 million of incremental cost, which was calculated using the Black-Scholes option-pricing model, of which $ 2.0 million of the incremental cost was recognized immediately, and $ 1.4 million of the incremental cost will be recognized on the straight-line basis over the remaining vesting period of the repriced options. The incremental cost is included in general and administrative expense and research and development expense on the consolidated statements of operations and comprehensive loss. The following assumptions were used to estimate the fair value of stock option awards granted to employees under the Company’s equity incentive plans and the shares purchasable under the ESPP during the periods presented: Year Ended December 31, 2023 2022 2021 Employee Stock Options Expected term (in years) 1.0 - 7.0 4.4 - 6.1 4.6 - 6.1 Risk-free interest rate 3.36 % - 4.73 % 1.31 % - 4.35 % 0.65 % - 1.30 % Volatility 70.01 % - 170.69 % 71.10 % - 89.87 % 78.80 % - 84.79 % Dividend yield — — — Employee Stock Purchase Plan Expected term (in years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Risk-free interest rate 4.87 % - 5.47 % 0.60 % - 3.51 % 0.06 % - 0.20 % Volatility 115.19 % - 216.45 % 64.98 % - 121.43 % 61.29 % - 87.13 % Dividend yield — — — F-22 Table of Contents The following table summarizes stock option activity for the years ended December 31, 2023, 2022 and 2021: Shares Subject to Options Outstanding Weighted- Average Remaining Contractual Life (Years) Aggregate Intrinsic Value Shares Weighted- Average Exercise Price (in thousands) Outstanding as of December 31, 2020 9,401,082 $ 13.42 8.1 $ 10,182 Options granted 3,159,126 $ 9.82 Options exercised ( 325,494 ) $ 6.19 Options forfeited/cancelled ( 2,800,054 ) $ 14.14 Outstanding as of December 31, 2021 9,434,660 $ 12.24 7.4 $ 15,822 Options granted 9,271,272 $ 6.75 Options exercised ( 270,707 ) $ 6.41 Options forfeited/cancelled ( 948,060 ) $ 15.69 Outstanding as of December 31, 2022 17,487,165 $ 9.24 8.1 $ 47 Options granted 17,159,617 $ 1.16 Options exercised — $ — Options forfeited/cancelled ( 11,020,667 ) $ 11.07 Outstanding as of December 31, 2023 23,626,115 $ 2.52 7.9 $ 369 Options vested and expected to vest as of December 31, 2023 23,626,115 $ 2.52 7.9 $ 369 Options exercisable as of December 31, 2023 8,952,067 $ 4.17 6.3 $ 1 The weighted-average grant date fair value per share for the stock options granted during the year ended December 31, 2023, 2022 and 2021 was $ 3.88 , $ 4.77 and $ 6.93 , respectively. The aggregate fair value of stock options that vested during the years ended December 31, 2023, 2022 and 2021 was $ 22.7 million, $ 20.7 million and $ 21.9 million, respectively. The aggregate intrinsic value in the above table is calculated as the difference between fair value of the Company’s common stock price and the exercise price of the stock options. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2023, 2022 and 2021 was $ 0.0 million , $ 1.5 million and $ 1.6 million, respectively. At December 31, 2023, the total unrecognized compensation related to unvested stock option awards granted was $ 25.3 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years. Warrants On July 24, 2023, the Company completed a private placement of 129,869,440 shares of the Company’s common stock and accompanying warrants to purchase up to 32,467,360 shares of the Company's common stock at a combined purchase price of $ 1.63125 per share and accompanying warrant, or with respect to any purchaser that was an officer, director, employee or consultant of the Company, $ 1.85125 per share and accompanying warrant. Each warrant has an exercise price per share of $ 2.04 , was immediately exercisable on the date of issuance and will expire five years from the closing of the private placement. Given that the warrants are indexed to the Company's shares of common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the warrants as additional paid-in capital on the Company's consolidated balance sheets. As of December 31, 2023, there were 32,467,360 warrants outstanding. F-23 Table of Contents Restricted Stock The summary of the Company’s restricted stock activity during the years ended December 31, 2023, 2022 and 2021 is as follows: Number of Restricted Stock Units Outstanding Weighted- Average Grant Date Fair Value Nonvested at December 31, 2020 3,330,821 $ 7.16 Granted 1,349,885 10.23 Vested ( 1,391,476 ) 5.86 Forfeited / cancelled ( 728,011 ) 10.03 Nonvested at December 31, 2021 2,561,219 $ 8.67 Granted 572,901 11.94 Vested ( 1,592,588 ) 7.78 Forfeited / cancelled ( 191,497 ) 10.68 Nonvested at December 31, 2022 1,350,035 $ 10.83 Granted — — Vested ( 779,900 ) 10.67 Forfeited / cancelled ( 142,437 ) 11.39 Nonvested at December 31, 2023 427,698 $ 10.92 At December 31, 2023, the total unrecognized compensation related to unvested restricted stock awards granted was $ 0.5 million, which the Company expects to recognize over a weighted-average period of approximately 0.1 years. Stock-Based Compensation Expense Stock-based compensation expense has been reported in the Company’s consolidated statements of operations and comprehensive loss as follows (in thousands): Year Ended December 31, 2023 2022 2021 Research and development $ 15,871 $ 24,415 $ 18,943 General and administrative 12,647 18,138 13,065 Total stock-based compensation expense $ 28,518 $ 42,553 $ 32,008 As of December 31, 2023, total unrecognized compensation expense related to the ESPP was $ 0.9 million, which the Company expects to recognize over a weighted-average period of approximately 0.8 years. Note 10— Property and Equipment, Net The Company’s property and equipment, net consisted of the following (in thousands): Estimated Useful Life (in years) December 31, 2023 December 31, 2022 Office equipment 3 - 7 $ 1,097 $ 1,097 Computer equipment 5 123 123 Software 3 52 130 Lab equipment 2 - 5 3,246 6,098 Leasehold improvements 6 - 7 2,562 2,562 Construction in process N/A — 83 Total property and equipment 7,080 10,093 Less: accumulated depreciation ( 5,432 ) ( 6,112 ) Property and equipment, net $ 1,648 $ 3,981 F-24 Table of Contents Depreciation expense for the years ended December 31, 2023, 2022 and 2021 was approximately $ 1.6 million, $ 1.8 million and $ 1.7 million, respectively, and was recorded in general and administrative expense and research and development expense, respectively, on the consolidated statements of operations and comprehensive loss. Note 11— Commitments and Contingencies Leases The Company subleases certain office and laboratory space under a non-cancelable operating lease expiring in January 2025 for the initial leased space and for the expansion space leased pursuant to an amendment to the lease agreement entered into in August 2018. The lease is subject to charges for common area maintenance and other costs, and base rent is subject to an annual 3 % increase each subsequent year. Costs determined to be variable and not based on an index or rate were not included in the measurement of the operating lease liabilities. Monthly rent expense is recognized on a straight-line basis over the term of the leases. The operating leases are included in the balance sheet at the present value of the lease payments at a weighted average discount rate of 7 % using the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment as the leases do not provide an implicit rate. As of December 31, 2023, the weighted average remaining lease term was 1.0 year. Lease costs were comprised of the following (in thousands): Year Ended December 31, 2023 2022 2021 Operating lease cost $ 3,114 $ 3,097 $ 4,029 Short-term lease cost 52 45 53 Total lease cost $ 3,166 $ 3,142 $ 4,082 Cash paid for amounts included in the measurement of operating lease liabilities as of December 31, 2023 and 2022 was $ 3.3 million and $ 3.2 million, respectively. Gross future minimum annual rental commitments as of December 31, 2023, were as follows (in thousands): Undiscounted Rent Payments Year ending December 31, 2024 $ 3,419 2025 144 Total undiscounted rent payments $ 3,563 Present value discount ( 117 ) Present value of lease payments $ 3,446 Current portion of operating lease liabilities (included as a component of accrued expenses and other current liabilities) 3,302 Noncurrent operating lease liabilities 144 Total operating lease liability $ 3,446 For the years ended December 31, 2023, 2022 and 2021, the Company recorded approximately $ 3.4 million, $ 3.3 million and $ 4.3 million, respectively, in rent expense. Rent expense is included in research and development and general and administrative expense on the consolidated statements of operations and comprehensive loss. Subsequent events The Company has evaluated all subsequent events and transactions through the filing date. There were no material events that impacted the audited consolidated financial statements or disclosures. F-25 EXHIBIT INDEX Exhibit Number Exhibit Description Incorporated by Reference Filed Herewith Form Date Number 3.1 Amended and Restated Certificate of Incorporation. 10-Q 8/8/2023 3.1 3.2 Amended and Restated Bylaws. 8-K 11/27/2023 3.1 4.1 Form of Common Stock Certificate. S-1/A 1/23/2019 4.1 4.2 Description of Securities Registered under Section 12 of the Exchange Act. 10-K 2/26/2021 4.3 4.3 Indenture, dated as of May 21, 2020, by and between the Registrant and Wilmington Trust, National Association. 8-K 5/21/2020 4.1 4.4 First Supplemental Indenture, dated May 21, 2020, by and between the Registrant and Wilmington Trust, National Association. 8-K 5/21/2020 4.2 4.5 Form of Global Note representing 5.00% Convertible Senior Notes due 2027 (included as part of Exhibit 4.5). 8-K 5/21/2020 4.3 4.6 Form of Warrant. 8-K 7/20/2023 4.1 10.1# Gossamer Bio, Inc. 2017 Equity Incentive Plan, as amended. S-1 12/21/2018 10.1 10.2# Form of stock option grant notice and stock option agreement under Gossamer Bio, Inc. 2017 Equity Incentive Plan, as amended. S-1 12/21/2018 10.2 10.3# Form of restricted stock grant notice and restricted stock agreement under Gossamer Bio, Inc. 2017 Equity Incentive Plan, as amended. S-1 12/21/2018 10.3 10.4# Form of Founder restricted stock grant notice and restricted stock agreement. S-1 12/21/2018 10.4 10.5# Gossamer Bio, Inc. 2019 Incentive Award Plan and form of stock option grant notice and stock option agreement thereunder. S-1/A 1/23/2019 10.5 10.6# Gossamer Bio, Inc. 2019 Employee Stock Purchase Plan. S-1/A 1/23/2019 10.6 10.7# Gossamer Bio, Inc. Non-Employee Director Compensation Program. X 10.8# Gossamer Bio, Inc. Restricted Stock Unit Agreement under the 2019 Equity Incentive Plan. 10-Q 5/12/2020 10.1 10.9# Gossamer Bio, Inc. 2023 Employment Inducement Incentive Award Plan and Form of Stock Option Agreement thereunder. 8-K 11/27/2023 10.1 10.10# Letter Agreement, dated November 16, 2020, by and between Faheem Hasnain and the Registrant. 10-K 2/26/2021 10.11 10.11# Employment Letter, dated December 4, 2018, by and between Bryan Giraudo and the Registrant. S-1 12/21/2018 10.10 10.12# Employment Letter, dated December 4, 2018, by and between Christian Waage and the Registrant. S-1 12/21/2018 10.11 10.13# Employment Letter, dated April 16, 2021, by and between Caryn Peterson and the Registrant. 10-Q 8/9/2021 10.1 10.14# Employment Letter, dated June 21, 2021, by and between Richard Aranda and the Registrant. 10-Q 8/9/2021 10.3 10.15# Employment Letter, dated November 25, 2023, by and between Robert Smith and the Registrant. X 10.16# Form of Indemnification Agreement. S-1 12/21/2018 10.14 10.17 Sublease Agreement, dated December 29, 2017, by and between The Medicines Company and the Registrant. S-1 12/21/2018 10.15 10.18 First Amendment to Sublease Agreement, dated August 24, 2018, by and between The Medicines Company and the Registrant. S-1 12/21/2018 10.16 10.19 Second Amendment to Sublease Agreement, dated June 1, 2022, by and between the Medicines Company and the Registrant. 10-Q 8/9/2022 10.10 10.20† Exclusive License Agreement, dated October 2, 2017, by and between GB002, Inc., the Registrant and Pulmokine, Inc. S-1 12/21/2018 10.17 10.21 Credit, Guaranty and Security Agreement, dated May 2, 2019, by and among GB001, Inc., as Borrower, Gossamer Bio, Inc., as Guarantor, MidCap Financial Trust, as Agent and Lender, and the additional lenders from time to time party thereto. 8-K 5/3/2019 10.1 10.22 First Amendment to Credit, Guaranty and Security Agreement, dated September 18, 2019, by and among GB001, Inc., as borrower, the Registrant, as guarantor, the other guarantors from time to time party thereto and MidCap Financial Trust, as Agent and as Lender, and the additional lenders from time to time party thereto. 10-Q 11/12/2019 10.1 Exhibit Number Exhibit Description Incorporated by Reference Filed Herewith Form Date Number 10.23 Second Amendment to Credit, Guaranty and Security Agreement, dated July 2, 2020, by and among the Registrant, GB001, Inc., GB002, Inc. and GB004, Inc., as co-borrowers, the other guarantors from time to time party thereto and MidCap Financial Trust, as Agent and as a Lender and the additional lenders from time to time party thereto. 8-K 7/2/2020 10.1 10.24 Third Amendment to Credit, Guaranty and Security Agreement, dated December 7, 2022, by and among the Registrant, GB001, Inc., GB002, Inc. and GB004, Inc., as co-borrowers, the other guarantors from time to time party thereto and MidCap Financial Trust, as Agent and as a Lender and the additional lenders from time to time party thereto. 10-K 3/17/2023 10.23 10.25 Fourth Amendment to Credit, Guarantee and Security Agreement, dated February 14, 2023, by and among the Registrant, GB001, Inc., GB002, Inc. and GB004, Inc., as co-borrowers, the other guarantors from time to time party thereto and MidCap Financial Trust, as Agent and as a Lender and the additional lenders from time to time party thereto. 10-K 3/17/2023 10.24 10.26 Stock Purchase Agreement, dated July 12, 2022, by and among the Registrant and the Purchasers named therein. 8-K 7/13/2022 10.1 10.27 Securities Purchase Agreement, dated July 19, 2023, by and among the Registrant and the Purchasers named therein. 8-K 7/20/2023 10.1 10.28 Form of Option Repricing and Cancellation Agreement . 10-Q 8/8/2023 10.1 21.1 List of Subsidiaries of the Registrant. X 23.1 Consent of Ernst & Young LLP, independent registered public accounting firm. X 31.1 Certification of Chief Executive Officer of Gossamer Bio, Inc., as required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. X 31.2 Certification of Chief Financial Officer of Gossamer Bio, Inc., as required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. X 32.1* Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 32.2* Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. X 97 Policy for Recovery of Erroneously Awarded Compensation . X 101.INS XBRL Report Instance Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.CAL XBRL Taxonomy Calculation Linkbase Document X 101.DEF XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB XBRL Taxonomy Label Linkbase Document X 101.PRE XBRL Presentation Linkbase Document X # Indicates management contract or compensatory plan. † Portions of this exhibit (indicated by asterisks) have been omitted for confidentiality purposes pursuant to Item 601(b)(10)(iv) of Regulation S-K. * These certifications are being furnished solely to accompany this annual report pursuant to 18 U.S.C. Section 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934 and are not to be incorporated by reference into any filing of the Registrant, whether made before or after the date hereof, regardless of any general incorporation language in such filing. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GOSSAMER BIO, INC. By: /s/ Faheem Hasnain Faheem Hasnain President and Chief Executive Officer Date March 5, 2024 SIGNATURES AND POWER OF ATTORNEY Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Faheem Hasnain President, Chief Executive Officer and Chairman of the Board of Directors (principal executive officer) March 5, 2024 Faheem Hasnain /s/ Bryan Giraudo Chief Operating Officer and Chief Financial Officer (principal financial and accounting officer) March 5, 2024 Bryan Giraudo /s/ Russell Cox Director March 5, 2024 Russell Cox /s/ Thomas Daniel, M.D. Director March 5, 2024 Thomas Daniel, M.D. /s/ Renée Galá Director March 5, 2024 Renée Galá /s/ Sandra Milligan, M.D., J.D. Director March 5, 2024 Sandra Milligan, M.D., J.D. /s/ John Quisel, J.D., Ph.D. Director March 5, 2024 John Quisel, J.D., Ph.D.